LME aluminium rises on inventory decline in China’s key consuming regions

Aluminium traded on London Metal Exchange rose on Thursday's night trading to close at US$1,681.50/mt. Analysts at the Shanghai Metals Exchange attributed the rise to the inventory decline in China's major consuming regions. The contract traded on Shanghai Metals Exchange opened at US$2,195 on Friday after closing at US$ 2,144 on Thursday.

LME aluminium official opening stock currently stands at 2159950 tonnes.

Base metals traded on the Shanghai Futures Exchange are expected to be subject to market sentiment today, observed SMM in an early morning forecast. “US dollar is expected to get a boost from positive outlook for US’s Q3 GDP, whether or not base metal prices will be weighed down will depend on market sentiment,” said SMM.



Inventory shrinkage in China key markets also drove SHFE 1612 aluminium up at RMB 13,795/mt with exit of shorts after opening at RMB 13,585/mt. SHFE 1612 aluminium soared by RMB 220/mt to RMB 13,750/mt at towards the close of trading, up 1.63 per cent. According to SMM forecast, spot premiums are unlikely to decrease in the short term due to tight supply of aluminium ingots, and this will buoy SHFE 1612 aluminium through Friday and beyond. SHFE 1612 aluminum should move at RMB 13,700-13,900/mt on Friday, SMM foresees.

In China’s domestic market, spot premiums are expected to trade at RMB 480-520/mt over SHFE 1611 aluminium on Friday with firm offers from suppliers.

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Key macroeconomic indicators:

• US GDP growth will accelerate to 2.5 per cent in Q3; so, robust growth expected.
• Factors such as stable manufacturing PMI, positive wholesale inventories and new home sales in September are also expected to support GDP growth.
• Capital investment being mild till now market players are ot too much optimistic about Q3 GDP growth.
• The euro zone’s economic climate index is expected to rise further in October.  
• US core PCE price index and CPI are expected to improve in Q3.